Do you feel like you were meant to have a kick-ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you weren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I’m Britt Siva, social media and marketing strategist just for hairstylists, and this is the Thriving Stylist Podcast.
What is up and welcome back to the Thriving Stylist Podcast. I’m your host, Perceva, and today we’re talking about uncapped commissions, how absolutely wonderful they are for both stylists and salon owners and why I think this is going to become the standard of practice, the standard of compensation, the standard of pay in the next three to five years. I think by 2030 for sure, this is just how it’s going to be. There is no downside. It’s only upside for both stylists and salon owners. High performing stylists are getting what they actually deserve. Salon owners are protecting profit margin, which is the most finite, diminishing resource in a salon like everybody wins when we do it this way. The reason why when I talk about uncapped commissions or why anybody talks about, you know, high commissions for stylists, it feels scary is because most salons have such broken financial models that paying people well becomes an impossibility.
When we fix the entire model, the financial model in the salon, not only can you pay your team properly, you get a guaranteed profit margin, you’re able to pay the bills every single month, you’re not floating cash hoping to get by. We eliminate all of the arms of the business that are running essentially at a nonprofit or operating at a loss or overinvested in or whatever. We remove all of those barriers and then we’re able to just pay people really well. We retain all of our high performers and we protect the margin first. So I wanna break it all the way down so that stylists understand how you can be getting like up to 70, 72% commissions from your salon and how salon owners can be protecting more of their profit margin and taking home more as well. Like it’s literally an everybody wins kind of system and I wanna break it down in fall.
We started talking about uncapped commissions here at Thriving Stylist in 2022. So for us, this is not a new concept. We’ve been coaching to it for over four years. At the time we called it profit of profit method, PFP. It was always just uncapped commissions and for some reason in 2022, I thought if I put like a cute name on it, people would be into it more. That was so silly. It really is just uncapped commission, so I’m gonna call it what it is moving forward. And this is the compensation method we teach in Thriving Stylist Method and we’ve been teaching it for four years. It’s rolled out really, really well. I have a s- a success story about to share with you in a minute. And essentially the way it works is that the stylist makes the lion’s share of service revenue produced, which is essentially what stylists are seeking.
When you look at a traditional commission model, it looks something like this. “Hey stylist, you’re gonna come work for me and I’m gonna give you a 40% commission and the salon or the house keeps 60%. What does immediately the stylist say? “That’s not fair. I’m doing all the work, you’re keeping the majority. So then they fight for things like 45% commission and it’s like, ” Well, it’s closer to fifty fifty, right? Stylist keeps 45, salon keeps 55. “Still doesn’t sit well with stylists though. They’re like, ” It’s just not fair. I’m doing all the work. You’re making all the money. “Now, I’ve been on the salon leadership side. I’ve had to try and balance the budget and scramble to make payroll. So I understand, like, I’m not delusional. I know that the salon owners out there are already, like, raising a fist and they’re like, ” The 55% isn’t profit.
“I know. So the salon is then trying to live off that 55% that stylists are pissed about because they’re like, ” You’re taking all my money. “And you’re like, ” Girl, I’m not taking hardly anything. “Like, everybody’s struggling. The stylists feel cheated, the salon feels cheated, like nobody’s winning. And we’re like, ” Well, it’s just the way it’s done around here. “There’s no other business in the world that operates like that where everybody’s being cheated. And that’s why our business model as salons has been fragile literally for decades is because it’s not operated like a traditional business would be. When we use an uncapped commissions model, which I formally called profit of profit, it’s essentially the same. Everybody wins, everybody is happy and salons find the margin. Like there is no downside on it. It’s only upside, which is why I think in the next four years, I think about 2030, all salons will have shifted this way.
So if you’ve not already looked into uncapped commissions or what I used to call profit of profit or thriving leadership, I mean, now is your chance because salons who hold onto traditional commission models, I think are going to end up in trouble because you’re going to have a really hard time competing with those who have gone uncapped. Like, how are you going to sell the opportunity to work with you as a salon owner if the salon down the street is offering uncapped commissions to up to 70%? Like how are you going to do it? Serious question. So might as well at least be curious about what I’m going to say so that as your competitors do start to adopt this model, you now aren’t working at a disadvantage where you’re offering 20% less commissions. That would be very difficult to fill your salon with.
So let’s look at how this works. I want to start right at the top by explaining kind of the nuts and bolts. I’m going to give you the sales pitch of it, okay? When we do an uncapped commission model, it creates the opportunity for stylists to earn up to a 70, sometimes 72%, but 70 to 72 usually is where the s- the scale kind of slows and growth so rapidly that it feels like that’s the top. In reality, stylists truly could make uncapped. Like, is there a world where a stylist is making 90% commissions absolutely in this model? The production would be so high. They’d certainly be an anomaly, but it could happen. Usually when we see salons running this at scale, 70 to 72% is basically the top of what stylists are making, but commission stylist making 70, 72% commission is pretty phenomenal, okay?
So stylists can create up to 70% commissions while fully protecting the salon’s profit margin. The salon profit margin is at zero risk, okay? Stylists who work part-time have the same opportunities to earn up to that same 70, 72% commission, just like the full-time stylists. So in a lot of models, when I go in and I’m coaching a salon and they’re operating on a different pay structure, a lot of times the part-time people don’t have the same earning opportunities as the full-timers, that’s crazy, especially with the way the industry is heading and a lot more people are choosing to be part-time, would be silly not to reward those who are working less hours, freeing up their chair, you know, the back half of the week or whatever. If they’re producing a ton in just two days or three days, they should be rewarded for it, like volume counts.
So there’s no downside of being a part-time high producer. The commission rates are available for everybody. And in fact, somebody who is working two or three days at extremely high efficiency could actually earn higher commissions faster. Like there, there is a, a massive upside to be a part-time efficient producer, which is really motivating to stylist too. Again, there’s no downside to this. It allows for easy to understand financial targets for stylists. Like I said, one of my massive advantages of being a coach is I’ve been able to coach thousands of stylists and salons at this point and I’ve looked at how their pay structures are and I’ve watched what they’re trying to roll out to stylists. It is so confusing. When you go to your stylist and you’re like, you are able to make 55% commission if you just hit these 10 benchmarks. That’s extremely overwhelming.
It’s extremely defeating. It’s not motivating. Some of the ratios and markers stylists don’t even understand a lot of them they don’t believe in and like trying to get somebody to work towards something that they don’t believe in, good luck. So it’s much easier. It’s just simple financial numbers. It’s one number. You hit this number, you make more and commission. It’s just so straightforward. It’s very easy to digest. The structure stays stable if high performers leave. That’s one of my favorite parts of it. If you’re a salon owner listening to this, if your two best high producers walked out tomorrow, they were part of a walkout and it was your two highest producers and maybe two lower producers, how much financial trouble would you be in? It’s your two top producers, okay? Let’s say they, those two people account for 25% of salon revenue. How much trouble would you be in?
A lot of you are like shuttering your doors. You’re like, “That’s my nightmare.” Uh, with this model, you would be in no trouble at all. It doesn’t affect the financial structure of the salon. Would it suck? Sure, for sure. It would still be a bummer. It’s not that there wouldn’t still be financial hurt. You would have no issue making payroll, you’d have no issue covering expenses because what happens is that most salons are set up based on success being contingent on a very few high producers. That’s how most salons are operating today, that the big dogs are keeping the lights on in the building. That is so fragile. And that’s why a walkout is like the scariest thing to a salon owner because they could lose their whole livelihood based on two or three angry people at the top. Can you see how fragile that is?
There’s no other business model in the world that looks like that and we have to kind of get out of that. Next, this system has nothing to do with retention, pre-booking percentage, retail sales, utilization, anything else. Like I said, there’s no, like, nine marker list somebody has to meet to make more commission. It’s simpler for the salon, it’s simpler for everybody. Lastly, commissions are in no way tied to price point. In my opinion, they never should have been. It’s two totally different things. The price that we’re advertising to the client and the amount that the stylist makes on the backend have no relationship to each other. And I can hear the salon owners out there right now saying, “Of course they have a relationship to each other. If I’m paying my stylist more, they have to be charging the client more.” Not true, not true at all.
And actually, I’ve watched systems that are built like that completely deflate a stylist demand. Think about it. I want you to think about it. If you’re an owner who’s currently operating your salon in a system where currently price increases and commissions go hand in hand, have you ever at any point gone and raised a stylist price point because they, they’re, you know, they’ve earned it. There’s a system where they’ve earned it and both those things go hand in hand. So you raise their price point, they’re now charging more to the client and they earn 1% more in commission or 2% more in commission and they’re charging $5 more to the client or $10 more to the client and that stylus sees a dip in demand. So now you’re paying them more, they’re charging more, but when you look at the financials, you’re not coming out ahead.
That’s the piece that people don’t talk about. Here’s the challenge I give you if you’re a salon owner. Imagine that I have a crystal ball. If I was to look into the back end of your business, I’m gonna guess you have some high producers that are doing amazing. Call it 20 or 30% of your team. They’re doing absolutely incredible. They’re killing it, they’re growing fast, clients love them, super profitable, everything’s great. And then you have a handful of newer team members who are just building. They’re just growing. They might not even be profitable yet, but listen, they’re just getting started. And then there’s the middle. And the middle is where we actually get into trouble because they’re past the beginner stage, but they’re not the big dog high producer stage. That middle zone is your trouble zone and that middle zone is where you do things like a price increase along with a commission increase and when you look at the actual profitability on that person, you’re losing money.
That’s where models that tie pricing and commission together secretly fail you. Because when you look at the, the top line logistics of it, you charge this client more and we have the money to pay the stylus more and that’s where these systems try and sell you on. They’re like, “Well, the client is actually gonna pay for the raise. Ha ha ha. Run the money on that. It’s not how it works.” And actually, if you did a deep dive analysis of your entire team, that’s probably not what’s happening at a detailed finite level. What’s happening is the middle is draining your funds and you’re ending up in trouble because of the middle, not the bottom. We blame the bottom, that’s actually not usually the problem zone, okay? So lots of upsides to doing it this way. So here’s how our structure works and how we look at pricing versus compensation and then I’m gonna get into how uncapped commissions work at the end.
So what we do, what we coach to is 90 day quarterly conversations. We don’t call them quarterly reviews. They’re not necessarily performance reviews at all. They’re 90 day touchpoints. So every three months we’re having these touch points. And at these touch points, we’re determining a stylus price point. So we evaluate price point every 90 days, four times a year, a stylist gets a price point evaluation. How often are you doing a pricing evaluation on your team? Should be every 90 days. Any more than that, we’re missing markers, okay? So there’s eight different evaluating points that we look at for price increases. I have other podcasts on that and other trainings on that. You can go back and find those. Some stylists, when we look at some of our salons that are growing really fast, they do have stylists earning four price increases a year, no pushback, no problems, demand does not slump.
I wouldn’t say that’s the average. I would say that’s the anomaly. On average, we’re seeing more like two to three price increases a year for very driven stylists. For average stylists, like the stylists who are in there and they’re doing it, but maybe they’re not super driven, they’re seeing more like one price increase a year, never less than that. So when we’re looking at the stylists that we coach through this method, there’s nobody who’s not earning at least one price increase for year. If you’re not doing annual price increases, I promise you the economy is passing you by. That being said, if you do a price increase for cost of goods or to adjust for the economy, I promise you’re hurting your demand. So we have to look at these eight factors and determine if you’ve actually earned one. If you haven’t, your demand could slump, your revenue could slump lots of bad things, okay?
So we evaluate that price point and then we look at a completely different scale to evaluate the commission percentage. So there’s what you charge the client and then there’s what I pay you as your boss. They’re two completely different things. And as I explain those two things, can you see how they both have to do with money, but they’re not deeply tied to each other at all. The reason that we got them tied up and the reason why this conversation I’m having right now is making some salon owners uncomfortable is there are some coaching methods out there that have basically created a marriage between price point and compensation. That is so dangerous and it’s why you don’t see other businesses doing that. What you charge externally and what you can afford to pay people on the back end are two completely different things in any other business model.
We tied them together because of the fragility of our industry and when you package it up and you say things like, “Charge more to the client, pay more to the stylist,” it feels logical to a simple financial, you know, brain and system, it’s not good business practice. So we unravel all of that and we don’t do it. I just saw an Instagram post. It was sent to me about 100,000 times and it’s this other person who is coaching in the industry and I’m gonna read to you exactly what it says. It’s a video of this person speaking to a room of people and there’s a text box over it that says, “I’ve never seen a booth rental stylist that was more than 50% profitable.” To this coach, I would say, “Well, then you’ve not met a lot of booth rental stylists because I’ve seen the backend financials, the W2s, like the tax reporting of a lot of studio suite owners and booth renters who are absolutely making more than a 50% profit.” That to me is manipulative language and a lot of times we see statements like that coming out of coaching companies who deeply believe that employee-based salon models are the only way to go.
I will say, and I’ve always openly said, “I love an employee-based salon model. I’m not naive enough to think it’s the only way to go. I’m not inexperienced enough to think that independent stylists can’t make incredible money.” So false statements like that really irritate me because I feel like it’s lying to both sides. It’s not true to the owner, it’s not true to the stylist. And then it, it actually creates owners who are ill-equipped to have great conversations because what happens is a stylist comes to you and they’re like, “I’m thinking about booth renting.” And you go on the defense and say, “Well, you’ll never make more than a 50% profit.” And then you actually look silly when they get out there and they do. It makes you look uneducated. Don’t buy into coaching or advice like that because it’s not true and then it makes you sound like you don’t know what you’re talking about.
The reason why most salons have to keep commissions low is the model is completely broken. So what I usually see when I go in and do a full compensation evaluation is that salons are overpaying the underperformers and underpaying the overperformers and it creates a salon fully reliant on high performers for survival. Meanwhile, the high performers are taking an L making less than they should be to fund the bottom feeders and we can’t do that. And that’s why your top performers think about leaving to go to a suite or leaving to go booth rent because they run the money and they realize they could be making more elsewhere. We have to eliminate that system altogether so that when your top stylists run the math, they realize they can’t make money elsewhere, so why would they leave? And if your culture is good and your environment is good and, and you have all the good parts and pieces of a salon, they won’t leave.
There is no advantage to leaving. And what we want to create is the competitive advantage and when you do it like this, you can. Interruption for one second. If you like what we’re talking about in this episode, but the kind of salon owner or stylist that doesn’t like to just hear my suggestions, you wanna hear success strategies and budget breakdowns and marketing deep dives and real shares about the highs and lows of business in a way you’ve never seen before. You have to check out our new video series called After the Last Client. These are full 60 to 90 minute video deep dives behind the scenes of successful stylists, salon owners, and some of your favorite industry educators in a way you have never seen them before. If you haven’t checked it out yet, head to www.afterthelastclient.com to watch now and keep an eye out for future episodes.
All right, let’s get back to the podcast. So here’s how we create this uncapped commission system. What we do is we don’t start with the compensation, which is also a huge misfire. And when I watch other coaching companies into salons, they do not do a deep dive into the finances in a way that they’d even be able to create a compensation structure for that business. So what they say is, “Here’s our boilerplate cookie cutter compensation system that we create for every salon we coach to give it a whirl.” Can you see how that’s like not probably gonna work? So we don’t do that. Instead, we create a budget for the salon. There’s I think 13 to 18 different pieces for it. It’s relatively extensive. We run through this entire exercise. We have a couple of different models. We have a model for salons doing under a certain revenue threshold.
We have a model for salons doing over a certain revenue threshold, and then we have a model for booth rental salons. What it allows us to do is to use what we know about finances and profitability from salons at all different, you know, levels of development. You can have a super successful salon doing a quarter million dollars in revenue a year, or we coach salons doing $6 million a year in revenue, but we wouldn’t run the same model for both, right? They’re two totally different businesses. So we have different models for each. The reason why we also do for booth rental is we coach a lot of hybrid salons. And the cool thing about this compensation system is that the way that we do it is we create a model so that salons, if they want to, can offer a hybrid structure, meaning you can have a salon where you have renters and employees in there all happily working together.
The way the compensation model runs is there is no financial advantage to shifting to rental. So when we think about why do most stylists choose to go rental, they’re usually chasing freedom, like they want more flexibility than they have. Sometimes it’s because they want to use their own color liner or they’re really particular about what kind of like extension line they want to use and maybe you, the employer, don’t offer that. Sometimes they want freedom of tool, freedom of choice and so they’ll go independent. Sometimes they want to be able to charge whatever they want to charge. Sometimes it’s they want to make more money. And we do hear that a lot with this system and model, a stylist could choose to go from employee based to rental in the same salon, they will not make more money. And I love that about it and they shouldn’t.
The only reason stylists make more money going from employee based to independent is because they were not being compensated properly as an employee, only reason. So if we can overcome that hurdle and still protect salon profitability, it becomes a more seamless environment and there’s no weird feelings about those who are renters. Like it just creates the piece. So we run this entire budget and we take a look at the profit points that exist within your salon. Now what I will tell you is don’t do this. So a lot of salon owners hear this and they’re like, “Oh, perfect. What I’ll do is I’ll just take my expenses and divide it by the number of chairs I have and that’s how I’ll create the compensation structure.” Don’t do that. That feels like a recipe for bankruptcy. Do not do it that way. We have dialed in a system to ensure the profit point for all the different chairs in your salon and all the different areas of your business and we allocate it out to create your compensation structure so that the profit is protected.
You can do that. You can look at all of your expenses and divide it by how many chairs you have. That’s how I know a lot of salon owners do that to create their booth rental rates. Also very dangerous. I wouldn’t do that either and you’ll have a profitability issue. You can certainly do it like that and those of you who have will probably be like, “Yeah, I don’t have any profit. It’s not the way to go. ” So we run through this budgeting method. We create the profit point and then we create a compensation structure based on that, meaning profit comes first, we protect the profit first and then we create an entire chart and the chart has targets for those who work two days, three days, four days, and five days a week as stylists. In our thriving leadership method, we only coach to a two, three, four model.
I believe that four days a week as a stylist is a lot of pressure on your body. I think it’s plenty of time behind the chair. We have stylists in thriving stylist method who are doing 300, almost $400,000 a year in services working three and four days a week. You shouldn’t have to work five days a week to make great money. Do we have the five day a week person on our chart? We do. I know there’s plenty of salons who still have people working five days a week, that’s totally fine. So we have two, three, four, five. If somebody’s working one day a week, you could add them to the chart. It’s real tough to have an effective employee at that rate, but some of you do, you have long timers you want to put in that position, that’s fine. You can add them to the chart too.
Totally fine. What you end up with is a financial target for each commission increase. So for a stylist, I’m going to make up fake numbers because it’s not the same targets for every salon. Every salon would be unique. Let’s say in your salon, when a stylist is doing $4,000 a month in services working two days a week, they’re now at 55% commission. If they are doing $6,000 a month, three days a week, maybe they’d be also at 55% commission. So it’s this giant chart that a stylist can look at at any time, know what their financial target is, and as soon as they’re hitting that target and those 90-day conversations, they’re able to increase their commission so they could earn three, four commission increases in a year and maybe they only earn one price increase or maybe they do earn two. It’s two totally different things that we’re evaluating.
I know this is very very numbery. I hope I peaked curiosity more than anything. I do believe in the next two, three, four, five years, this will be the compensation model that the average salon is running on and it’s real difficult to compete with if you haven’t at least taken a peak at it and understand what it could do for your business and for those who you’re hoping to hire or you already have on the team. I am hosting a three-day training. It starts on July 13th and if you want to learn more about how I coach salon leaders, the successes that they’re having using, you know, our coaching system, we’d love to have you there. It’s three days, it’s bite size, those replays on everything. You can head to thrivingstylus.com/nextlevelsalon. You do have to register by July the 13th, 2026. If you do not, you cannot get in.
We don’t do delayed access on it. So thrivingstalus.com/nextlevelsalon. If you want to look at what it looks like to do uncapped commissions, if you want to see how this can be profitable to the salon, I would love, love to have you there. As I always say, so much love, happy business building, and I’ll see you on the next one.
